New ND government in Greece will be ‘credit positive’, lead to ‘large debt reduction’, Moody’s says

New Democracy’s strong results in last Sunday’s elections significantly increase the chance that it will form a government after the repeat elections to be held at the end of June, Moody’s credit rating agency noted on Thursday.

This means that there will be continuity in fiscal and economic policy and is credit positive for Greece’s rating, it added. The rating agency also forecast that Greece will see one of the largest debt reductions globally, with general government debt falling below 150% of GDP in 2025 from 171.3% in 2022, thanks to the prospect of significantly higher nominal GDP growth in the next years.

Maintaining the focus on improving the business environment and banking sector, along with the implementation of milestones and reforms under a national recovery plan, will help support economic growth, Moody’s noted.

Combined with a commitment to fiscal adjustment and an increase in primary surpluses, maintaining the current fiscal and economic policies “improves the prospects for a significant reduction in Greece’s public debt burden,” it said.

It also underlined that the Greek economy recovered strongly after the pandemic, with real GDP growing by 5.9% in 2022 and 8.4% in 2021, after a 9% decline in 2020.